Dakahlya Businessmen's Association for Community Development, Egypt
Total Page:16
File Type:pdf, Size:1020Kb
Dakahlya Businessmen’s Association for Community Development, Egypt The Dakahlya Businessmen’s Association for Community Development (DBACD) was founded as an NGO in March 1995 under the Ministry of Social Affairs. After signing a Cooperative Agreement with USAID in October 1997, DBACD disbursed its first individual loan in late 1998 and its first group loan in 2001. As of December 2009, DBACD had an outstanding portfolio of 131.7 M EGP (23.2 M USD), serving 104,175 clients in all the districts of the Dakahlya governorate, with a 49% proportion of individual loans and 51% of group loans. DBACD has the vision of “a Dakahlya society free of poverty with individuals enjoying a better quality of life”. Its mission is to “provide financial and non financial services to low income families in a sustainable and good quality manner, and to contribute in improving their standard of living.” Social Performance Rating March 2010 Overall, DBACD's Social Performance is rated “3” e Social Performance Financial Client Protection & Human Resources Social Management Inclusion Ethical Finance Policy Change 3- 3- 3- 3+ áá 3- Social performance management § DBACD has a clear intent to achieve social impact but would benefit from Indicators 2009 refining its social mission. The latter remains nevertheless sufficiently shared by Intent to have an impact Convincing the main stakeholders and is taken into account in key decisions. Risk of mission drift Low § DBACD still has to define social performance indicators to be monitored as such for an optimal decision-making. The institution nevertheless tracks basic client retention and outreach ratios and conducted some surveys and focus groups. 3- Financial inclusion § DBACD serves clients mostly located in the Dakahlya governorate, where most Indicators0 1 2 3 4 52009 individuals are deprived of access to formal financial services. The average Population poverty in areas of op. 46.7% poverty rate of districts where DBACD operates (46.7%) is close to the average % Female clients 56.3% in the governorate (~49%) and higher than the national average (40.5%), due to % Rural and semi-urban clients 72.9% DBACD’s outreach to rural and semi-urban areas. % Clients with social collaterals 50.7% § DBACD has satisfactorily adapted its lending services to address the clients’ % Penetration of adults in Dakahlya 2.9% Av. loan disbursed (USD) 264 needs thanks to surveys and feedback from operations. The new MIS is expected % of GDP per capita 29.9% to allow more adaptations. Constrained by legislation, DBACD cannot directly % Retention (Schreiner formula) 78.6% offer other financial services but plans to establish partnerships with licensed Effective Interest Rate ~32.4% providers. Group loans ~47.2% Individual loans ~29.0% § With an average EIR of 32.4% and moderate transaction costs, the cost of services borne by DBACD’s clients is reasonable. 3- Client protection & ethical finance § Committed to client protection, DBACD has put some good procedures to ensure Indicators 2009 the privacy of client data and to foster ethical behavior within the organization. % Loans checked / credit bureau 0% However, the institution ought to ensure that all repayment capacity analyses are % Loans checked /other MFIs 0% properly done, to further prevent over-indebtedness, and refine delinquency Loan Instalment/ disp. income n/a management procedures, to mitigate risks of inappropriate collection practices. % Clients w/credit life coverage 0% Formal mechanisms for redress of grievances are not yet in place but clients have % Clients bearing FX risk 0% Type of interest rate Flat sufficient opportunities to voice their concerns. % Clients visited by non-op staff 22% § Pricing information is not yet sufficiently clearly disclosed to clients, which is notably explained by the unfavorable legal framework for NGO MFIs. In such a context, loan conditions are generally shared verbally with clients in order to guarantee a minimum level of transparency. Planet Rating Société par Actions Simplifiée au capital de 667 000 EUR 13 rue Dieumegard 93400 Saint Ouen Immatriculée sous le n° 483 538 369 R.C.S. Bobigny t:+33 1 49 21 26 30 / f:+33 1 49 21 26 27 [email protected] www.planetrating.com Social Performance Rating – DBACD, Egypt – March 2010 3+ Human resources policy § Thanks to a professional HR management, all employees benefit from fair and Indicators 2009 equal Human Resources practices. However, despite the on-going efforts to % of women among staff 45% encourage gender equity within its staff, the access of women to management % of women among management 25% positions remains very limited. % staff who had over 2 external 8% § DBACD offers an attractive compensation policy, thanks to yearly adjustments, training days Yearly salary increase / inflation 2.2 social benefits and opportunities for staff to develop their skills. Staff Turnover 15% § Labor conditions are satisfactory thanks to procedures designed to ensure the Traffic accidents per 100 LO n/a security of employees handling cash and sufficient consideration of the staff concerns. However, given the difficulties to dismiss staff under permanent contract for NGOs, most of DBACD’s employees are under limited term contracts ranging up to three years for well-performing staff. Education, Health, Basic ááááá Social change Services Gender Equality and Women § Non-financial services, provided through DBACD’s Information and ááááá Empowerment Technology Center (ITC) are essentially focused on the development of Fight vs. Unemployment ááááá language, IT, and Business Development skills. They have been satisfactorily Democracy & Human Rights ááááá adapted to the students’ needs thanks to Focus Group Discussions, feedback End Poverty ááááá Environment Sustainability ááááá from students and placement tests. § However, the performance of the ITC ought to be more formally monitored to ensure its efficiency, quality and profitability. § DBACD has been offering financial and non-financial services for several years, but the proportion of clients receiving both services is still very limited. DBACD Profile Country Profile Indicators Egypt MENA Financial Services Demography ü Credit Services: 104,175 borrowers as of December 2009 Urban population (%) 42.6% 55.1% § Group lending (50.7%), Individual lending (49.3%) Health § Av. amount disbursed /loan: 271 USD (11% of GDP per capita) Life expectancy at birth 71.0 67.8 Mortality rate (<5) per 1,000 births 20.5 38.0 § Average Effective Interest Rate: 32.4% Education û Savings Services: 0 savers Adult literacy rate (%) 71.4% 71.8% Combined school enrolment ratio (%) 76.4% 65.9% û Microinsurance Services: 0 insured clients Gender Parliament seats held by women (%) 3.7% 6.0% û Money Transfer Services: 0 users Poverty lines Population below NPL 19.6% n/a Population below 2$/day (%) 40.5% n/a Gini index 33.2 n/a Non Financial Services HDI 0.716 0.713 Rank out of 177 countries 116 n/a Awareness Raising Training Service 2000-2006 progress 0.051 n/a ü ü û Business Development Economy (2009) Education, Health and ü ü ü Economic growth (%) (f) 4.7% n/a Basic Services Inflation (%) 16.2% n/a Women Empowerment û û û Source: UNDP 2008, COFACE for growth, and IMF for inflation. Democracy & Human Rights û û û Environment û û û Contacts: Planet Rating: Edouard Sers; [email protected]; t. + 33 1 49 21 26 30 REF:ES/260310 DBACD: Mr. Hassan Faried; [email protected]; + 20 50 226 00 86 www.planetrating.com 2 Social Performance Rating – DBACD, Egypt – March 2010 Refer to the end of the report for the institutional to the Zakat-based model1: In 2009, the BOD decided that presentation of DBACD, as well as the Microfinance Sector 3.7 M EGP (393 K USD2) shall be allocated to charity but and Socio-economic Environment sections. only 20% of this amount has been granted away so far.3 Social Performance Rating The social mission has been taken into account in key decisions such as branch opening, diversification of the target clientele, development of new products, and recently, the slight decrease in pricing.4 However, these decisions § Social performance management were not taken based on detailed social performance Social performance management is rated “3-” information due to the limited social performance monitoring (refer to next section). Similarly, although the Definition of the social mission planning includes DBACD’s social mission and goals, it lacks more detailed objectives and indicators with a clear DBACD identification of related challenges and constraints. Definition In Progress Year of latest update 2004 DBACD has made investments to strengthen its skills in Intent to have a social impact Convincing terms of Social Performance Management (SPM) and client research, notably thanks to trainings provided by Sanabel DBACD has a clear intent to have a social impact but has and MicroSave. Market research tasks have been so far not yet designed its entire impact pathway. Originally handled by operations managers who actively participated limited to the provision of non-financial services, the social to client studies conducted by external providers (e.g. mission of DBACD was later extended first to microfinance USAID) but are still building their skills in this domain. HR services (individual lending) in 1997 (when the institution processes (e.g. recruitment, training, evaluation) and signed a cooperative agreement with USAID) and then to internal communication sufficiently ensure that staff are group lending in order to reach lower income individuals. committed to social goals. The bonus system, based on The social mission now covers the main facets of portfolio and PAR, does not include social criteria yet. DBACD’s social performance. However, it has not been updated since 2004 and therefore needs to take into account: 1) the potential evolution of the social challenges DBACD Social mission’s inclusion in HR management of the Dakahlya governorate, 2) DBACD’s plan to expand Recruitment In Progress to new governorates, and 3) its current perception by all Trainings In Progress DBACD’s stakeholders, especially since the BOD was Appraisal In Progress recently renewed.